In May 2009 the Board of Securency International Pty Ltd referred to the Australian
Federal Police (AFP) allegations raised by the media concerning the company's
use of agents in foreign countries. The AFP commenced an inquiry into the
matter, which subsequently widened to include the use of agents by Note Printing
Australia Ltd (NPA). The companies' boards and the Reserve Bank extended
their full support to the AFP inquiry over the past two years.

As a result of that inquiry a number of charges have been laid today, arising from
alleged events between 1999 and 2005. The charges allege the two companies
and a number of individuals engaged in conspiracy with sales agents in foreign
jurisdictions to pay bribes to officials in those countries for the purpose
of business advantage. A number of people who were employees of the companies,
including two former chief executives, have been charged. Consequently, the
companies have been charged at a corporate level.

None of the individuals charged now has any connection with the companies or with
the Reserve Bank.

No one in the Reserve Bank has been accused of wrongdoing, nor have any members of
the company boards who were drawn from the Reserve Bank.

The Governor said ‘The Reserve Bank condemns in the strongest terms corrupt
or questionable behaviour of any kind. Companies associated with the Reserve
Bank and their staff must, like the Bank itself, meet the highest standards
of integrity and fully comply with the law. This is what the Australian community
expects’.

‘The Reserve Bank deeply regrets that the governance arrangements and processes
in the companies at that time were not able to prevent or detect the alleged
behaviour that has led to today's charges.’

Over the past several years much has been done to tighten controls and strengthen
governance so as to avoid any re-occurrence of the alleged behaviour:

Those charged with offences are no longer with the companies;

The use of sales agents has ceased;

Policies and procedures at both companies have been thoroughly overhauled;
and

The Reserve Bank added executive resources in the banknotes area and moved
to draw all its appointees to the boards of both companies from the Bank's
executive or the Reserve Bank Board.

‘The companies are now considering, in consultation with the authorities, their
responses to the charges laid against them today. The Reserve Bank and the
two companies continue to offer their full support and co-operation to the
Commonwealth Director of Public Prosecutions and the AFP in bringing about
a proper conclusion to these matters’, the Governor said.

The Board of Securency will be issuing a separate statement.

As these charges will now be tested in the courts, the Reserve Bank will not make
further comment about them, except as necessitated by the legal process.

Background

NPA is a company owned by the Reserve Bank, responsible for running the printing
works where Australia's banknotes are printed. Securency is a company half
owned by the Reserve Bank that produces the polymer substrate on which Australia's
banknotes are printed.